Step One: The dire economy of 2020 has proven to be the best for Bitcoin

Bitcoin was lower on Monday, holding just over $ 19,000 after raising around $ 1,000 over the weekend.

“There is an element of fatigue as the market fails to generate the momentum needed to drive us to new highs,” Matt Blom, director of sales and trading for cryptocurrency company Diginex, told clients in one E-mail.

European stocks rose in traditional markets. The UK and the European Union agreed to extend talks on a trade deal related to Brexit. US stock futures indicated greater openness as Washington lawmakers continued to negotiate a new stimulus package.

Market moves

For so many reasons, 2020 will go down in the history books. For many of these reasons, it could get lost in business textbooks.

This year saw the biggest decline in economic activity since the Great Depression, the biggest episode of money pressures in the Federal Reserve’s 107-year history, a landmark shift towards remote working, negative prices on crude oil futures, and the first real signs of the global financial system could migrate towards fast growing cryptocurrency and digital asset markets.

Bitcoin was invented only 11 years ago as the first and original cryptocurrency intended for use in a peer-to-peer electronic payment system that cannot be controlled by any person, company, or government. At the beginning of the year, Bitcoin was still considered a fringe investment that was belittled as “worthless” by the likes of billionaire Warren Buffett.

By the end of the year, Bitcoin had been the focus of conversation between big investors and Wall Street corporations – by proponents as a hedge against the possible currency deterioration that could be created by trillions of dollars in coronavirus-related stimulus money from central government banks and governments around the world World. Others saw the growing adoption of cryptocurrency and the underlying blockchain network as confirmation of a groundbreaking technology that could change finances forever.

Be that as it may, the 2020 Bitcoin market provided as good a prism as any to follow the monumental economic developments of the year and the reactions of national authorities and policy makers to the crisis.

Bitcoin’s returns in 2020 were many times higher than those of the Standard & Poor’s 500 index and gold.

Source: CoinDesk

Over the next few days, First Mover will give a look back at the development of the Bitcoin market over the course of the year. Cryptocurrency prices have nearly tripled, attracting bullish comments from big traditional financial firms like JPMorgan Chase and BlackRock, AllianceBernstein, Morgan Stanley and Tudor Investment.

This story could really be another way of telling the broader account that low interest rates and the rule of the dollar as the global reserve currency allowed the U.S. government and its corporations to accumulate heavy debt in the years leading up to the coronavirus outbreak. Once that happened, the answer was to invoke what a leading economist called a “war machine” – the Federal Reserve, which funds US government emergency packages that cost trillions of dollars.

After all, from stocks to bonds, markets have been dependent on the expectation of stimulus in the amount necessary to prevent investors from suffering losses deep enough to undermine confidence and the economic recovery to affect.

Meanwhile, China has pushed ahead with its plan to introduce a digital version of its yuan, creating a feeling that a virtual currency from the world’s second largest economy could ultimately challenge the US dollar’s dominance in payments for world trade. In the US and elsewhere, billions of dollars in venture capital and trader money flowed into a series of obscure digital tokens on blockchain-based, semi-autonomous trading and credit systems – collectively known as “decentralized finance” or DeFi; The rapid growth suggested that digital asset markets could be an oasis of innovation in an otherwise stagnant global banking system.

Whether due to causes or correlations, or just wishful thinking, the Bitcoin market, which has long been viewed as a hotbed of volatility and unrestrained speculation, suddenly seemed to surge with almost every new turn.

Next Tuesday: Even before the coronavirus hit, Bitcoin traders and mainstream economists were increasingly concerned about the slowdown in the US economy, the rapid growth in corporate debt, and whether the dollar was facing a growing threat to its global currency hegemony.

Bitcoin clock

The Bitcoin daily price chart shows the profit taking in the week after the cryptocurrency rose to a new all-time high, followed by a rebound in the past few days.

Source: TradingView / CoinDesk

Bitcoin’s revived uptrend could soon lead to a highly anticipated breakout above the $ 20,000 mark.

“We saw a big uptrend over the weekend. MicroStrategy’s efforts to add bitcoin holdings to several large companies have brought new optimism,” Matthew Dibb, Stack Funds chief operations officer, told CoinDesk. “We believe we will see a $ 20,000 violation in the coming weeks.”

On Friday, business intelligence firm MicroStrategy raised $ 650 million through a sale of convertible bonds to fund Bitcoin purchases. The deal was topped up by $ 550 million. Since then, the cryptocurrency has surged over $ 1,000 and was last trading near $ 19,100 according to CoinDesk 20 data.

The cryptocurrency doubled from $ 10,000 to a new record high of $ 19,920 in the 12 weeks ending December 1, before falling to $ 17,700 last week due to profit-taking. Pullbacks are a normal element of bull markets and often charge the engines for a bigger climb.

Jehan Chu, CEO of Kenetic Capital, is also planning Bitcoin, which will move “two steps forward, one step back” with a price action. However, the breakout is likely to remain elusive until the new year as some investors are still trying to hit record highs.

“The top remains with many sales orders, possibly from miners,” Patrick Heusser, trading manager at Crypto Broker AG in Zurich, told CoinDesk via Twitter.

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What is hot?

According to Fidelity’s Abigail Johnson, the cryptocurrency industry is moving so fast that it is very difficult to “keep up” (CryptoSlate).

Bitcoin is a “fascinating display of animal spirits and speculation,” says Jeff Gundlach of DoubleLine (Business Insider).

$ 600 billion of additional Bitcoin demand could arise if pension funds and insurance companies in the US, euro area, UK and Japan allocate 1% of portfolios to the asset, compared to the cryptocurrency’s current market capitalization of around 350 billion. USD, JPMorgan analysts write new report (Bloomberg)

Wall Street heavyweights dealing with bitcoin are the enemy of many who come from the cypherpunk roots of cryptocurrency, writes CoinDesk’s Michael Casey in the Money Reimagined Newsletter (CoinDesk).

China is looking to gradually adopt the digital yuan by consumers, said former central bank governor Zhao (South China Morning Post).

19-year-old Ukrainian lawmaker announces possession of US $ 24.5 million in cryptocurrency Monero (CoinDesk).

Sygnum, a digital assets company with a Swiss banking license, claims to be the first bank in the world to tokenize its own shares (CoinDesk).

Aegis Custody Overcomes Hurdle in Applying for South Dakota Trust Charter (CoinDesk)

CEO of DeFi insurer Nexus Mutual hacked NXM tokens (CoinDesk) for $ 8 million

Bitcoin exchanges flood London’s metro with advertising (CoinDesk)


The latest on economics and traditional finance

Morgan Stanley says there is a chance a no-deal Brexit could lead the Bank of England to cut policy rates below zero (Reuters).

The remote working shift loosens Silicon Valley in the tech industry (WSJ) and Google opens the door to the “flexible working week” (NYT).

The Shandong Ruyi Technology Group, once considered the “LVMH of China”, is canceling the bondholders’ meeting over possible extension of the debt term as the coronavirus intensifies “liquidity pressures” and threatens interest payments this week (Nikkei Asia Review).

It is believed that suspected Russian hackers broke into the US finance and trade departments and monitored internal email traffic (Reuters).

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